Category Archives: Health Care

The Social Cost of Domestic Violence

Posted on August 16, 2018 by | 9 comments

Intimate Partner Violence (IPV) accounts for more than one in seven violent crimes in the United States. Between 16% and 23% of American women experience IPV while pregnant. Social science researchers have suggested that domestic abuse affects not only the mother-to-be but her unborn children, but the social cost of the problem has been difficult to measure.

A new study by three women, two economists and a health policy researcher, have found a way to compare the outcomes of women subjected to assault while pregnant versus those suffering violence up to 10 months after the estimated due date. They estimate the social cost per assault during pregnancy of nearly $42,000, implying a total annual cost to society of more than $4.25 billion.

“We find that prenatal exposure to assault is associated with an increased likelihood of induced labor, which is likely a response of the healthcare system to injuries sustained by pregnant victims of abuse,” write the authors of “Violence While in Utero: The Impact of Assaults During Pregnancy on Birth Outcomes,” a working paper published by the National Bureau of Economic Research.

There’s something in this study for everyone. For law-and-order types, the study shifts the prevalent preoccupation with the injustices of mass incarceration to the victims to crime. In addition to the obvious victims, the women subjected to assault, there are invisible victims: the lower birth-rate babies. Oh, and let’s not forget the general public, which winds up paying the medical bills to treat those  babies.

For social justice warriors, the authors remind us that “violence in utero is an important potential channel for intergenerational transmission of poverty.” Indirect costs come from increased childhood disability, decreased in adult income, increased medical costs associated with adult disability, and reductions in life expectancy. “Our results imply that interventions that can reduce violence against pregnant women can have meaningful consequences not just for the women (and their children), but also for the next generation and society as a whole.”

The authors don’t address the oft-noted observation that the American medical system has higher infant mortality rates than other developed countries. But their research sheds light on that phenomenon. The implication is that the higher incidence of infant mortality represents a failure of the U.S. health care system. But perhaps it really represents a higher rate of domestic violence than in other countries.

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Posted in Children and families, Health Care, Poverty & income gap

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Hospital Collections Are Ugly but Not the Real Problem

Posted on August 9, 2018 by | 9 comments

Source: The Virginia Mercury

I have big issues with the way hospitals conduct business in Virginia, especially the highly profitable nonprofit hospitals, as I have repeatedly made clear on this blog. But there’s one thing I don’t have a problem with — the fact that they try to collect their bills. Some observers find that practice problematic. Witness the recent story published in the Virginia Mercury, which kicks off this way:

Annie Washington is 60 years old, has diabetes and no insurance. If she needs to see a doctor, she winds up in the emergency room. But while hospitals can’t turn indigent patients away, they can still bill them. And when patients can’t afford those bills, collection lawsuits often follow.

“I work at McDonald’s,” the Henrico County resident said after a recent hearing over an $860 lawsuit filed by the doctors group that staffs VCU Medical Center. “There’s no insurance there.”

Virginia medical providers filed more than 400,000 lawsuits over the past five years, netting more than $587 million in legal judgments against their patients, an analysis of state court records by the Virginia Mercury has found. The review relied on data collected by virginiacourtdata.org, which aggregates online state court records.

Virginia Mercury deserves credit for plumbing a data source which heretofore has gone unreported upon. I appreciate the reporters’ enterprise. But I take issue with the implication that there is something disreputable about making an effort to collect unpaid bills. The capitalist system is based upon the premise people pay for the things they buy. The underlying problem with Virginia’s health care system is not that hospitals ask people to pay their bills but the insane way — insane, as in utterly disconnected from reality — that they calculate the bills in the first place.

Hospital charges, which are deeply discounted for Medicare, Medicaid and private insurers but not for individuals, are obscenely and unconscionably high. Many people, perhaps most people, are unable to pay the charges. But what are hospitals supposed to do? Not bill people without insurance? Or, if they don’t pay, make no effort to collect? If it is widely known that there are no repercussions for failure to pay, what incentive is there for anyone to pay?

Hospitals routinely provide charity care and write off unpaid bills. But how are they supposed to know who has the capacity to pay and who doesn’t unless they try to collect?

Sentara Health System, according to Virginia Mercury, uses predictive data analytics like credit scores to surmise who might be able to may and who might not. Bon Secours has adopted a policy of forgiving the debt of anyone whose income is 200% of the federal poverty level. That’s all very admirable, but there’s always a cut-off at which the people just below the line (whether credit score or income) get off free and people just above the line get stuck. A precept of the welfare state is that no matter where you set the line, there is always someone who draws the wrong side of it and there’s always someone deserving of compassion. Because there is always a victim, there is always a reason to draw a new, more forgiving line. That is not a sustainable model for a health care system.

If we want to address root causes, we must address the skyrocketing price of healthcare — both the cost of providing the care, caused by the cartelization of the industry, and the setting of insanely high nominal prices, the sole purpose of which is to establish a starting position for negotiating with insurance companies.

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Posted in Health Care

Health Care Dies in Darkness

Posted on August 3, 2018 by | 12 comments

VCU Health System has broken ground on a $349 million outpatient facility, the largest investment in its history.

The City of Richmond has an annual budget of about $700 million a year. The city gets loads of coverage by local media. Henrico County has an annual budget of about $1 billion a year. County government doesn’t warrant the same number of column inches or minutes of air time, but local media do catch the highlights.

The publicly owned and operated VCU Health System has a budget of about $1.5 billion a year. The quality of medical care there has just as critical an impact on the lives of the Richmond-area residents as, say, schools, roads, and municipal services. Moreover, increases in hospital charges have rapidly outpaced the increase in local tax rates for years — perhaps decades. Yet no one raises a peep, and local media tell us nothing about the hospital’s internal deliberations.

My purpose here is not to dis local media, which are under tremendous cost-cutting pressure and have shrinking resources to cover the news. It is simply to suggest than an institution so large and vitally important to a community — and the same could be said of Sentara in Norfolk, Riverside in Newport News, Carilion in Roanoke, Inova in Northern Virginia, and the University of Virginia Hospital in Charlottesville — needs public accountability. Oversight is all the more imperative when an institution enjoys nonprofit status that frees it from the burden of paying property taxes, sales taxes, corporate income taxes, and miscellaneous levies and excises.

It’s fair to say that the general public knows almost nothing about how VCU is run, what it’s long-range goals are, or how well it’s doing its job. Its annual report (like all annual reports) is essentially a public relations document. The only glimmer of accountability comes from the Virginia Health Information website, which compiles hospital data and publishes some “efficiency” metrics,  but provides no narrative analysis.

VCU Health generated an operating income of $136 million in fiscal 2016 — $120 million, if non-operating gains and losses are taken into account. It enjoys a protected market thanks to state and federal restrictions on competition. What is the public getting for the quasi monopoly status conferred upon VCU and the massive profits it generates? Not efficiency, that’s for sure.

Source: Virginia Health Information

Virginia Health Information compares gross and net hospital revenues per admission, adjusting for the acuity of cases. (As a tertiary care hospital and trauma center, VCU gets a disproportionate share of the hard cases, but the VFI methodology accounts for that.) For both categories, VCU falls within the most expensive quartile of hospitals, as shown in the table above.

Source: Virginia Health Information

VHI also looks at underlying costs. Again, VCU consistently comes out as one of the most expensive hospitals in Virginia, whether labor cost per admission, non-labor cost, or capital cost. Other tables shows that productivity/utilization ratios fall in the bottom two quartiles.

Despite these unfavorable comparisons — which VCU undoubtedly will say are unfair, perhaps with good reason — the health system retains $120 million a year in profits (what VHI terms “Revenue and gains in excess of expenses and losses”). An industry rule of thumb is that hospitals need to retain 3% of their earnings to reinvest in new plant, equipment and technology. VCU retains 8%, a difference of about $75 million a year.

In theory, VCU could rebate that $75 million a year to the community in the form of lower charges to patients. But hospital management, with the backing of the VCU board, has chosen to invest in institutional expansion. That includes, most controversially, significant expenditures to create the Virginia Treatment Center for Children, even though philanthropist William H. Goodwin had pledged to give $350 million to create an independent children’s treatment and research hospital. VCU declined to collaborate with Goodwin, preferring to charge ahead with plans to keep the children’s hospital under its own corporate umbrella. Goodwin has not announced how he might otherwise dispose of his proposed gift, but there is no guarantee that the Richmond community will be the beneficiary.

Nonprofit hospitals, like colleges and universities, are not profit-maximizing institutions — they are prestige-maximizing institutions. Hospital administrators don’t go into the hospital business to make massive fortunes (although they do very nicely). They go into the hospital business to enhance the status of the institutions with which they are affiliated. Nonprofit status is not some magic fairy dust that makes self-interest and self-dealing disappear. As with the quest for profit, there is no limit to how much money hospital leaders will spend to advance their institutional standing in a never-ending race with other institutions seeking to do the same.

These massive revenue- and profit-generating enterprises — VCU is hardly alone — operate with no effective restraint or public oversight in Virginia. For time immemorial, Virginia’s news media has defined its mission as holding government entities accountable. It’s high time they begin holding nonprofit universities and hospitals accountable as well. But they can’t — they lack the resources. As nonprofit universities and hospitals metastasize, growing swaths of Virginia’s economy function in darkness.

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Posted in Health Care, Not-for-profits

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Medicaid Expansion and the Coming Gusher of Hospital Profits

Posted on August 2, 2018 by | 14 comments


S&P Global Ratings, a big-three bond rating agency, predicts that Medicaid expansion will be “credit positive” for Virginia hospitals by reducing the level of uncompensated and charity care. Reports the Richmond Times-Dispatch:

The report does not change the current credit ratings of any Virginia health system, but S&P credit analyst Anne E. Cosgrove said the positive outlook “should help their bottom lines.”

“If you don’t have as much uncompensated care, this should help your underlying profitability,” Cosgrove said in an interview on Wednesday.

Virginia hospital officials played down the S&P announcement because they said enrollment under expanded Medical eligibility hasn’t begun and the benefits will vary among health systems depending on the mix of patients they serve.

Let’s get a sense of what the impact will be when an estimated additional 400,000 Virginians enroll in Medicaid. I have downloaded the latest financial data for Virginia acute care hospitals from the Virginia Health Information website, as displayed above. Collectively, they provided $2.6 billion in charity care and wrote off $1.9 billion in bad debts in the fiscal year 2016. They also made nearly $1.7 billion in profit (including “surplus” revenue reported by nonprofits).

Speaking in rough numbers, the federal and state budget for Medicaid expansion will inject about $3 billion annually into Virginia’s health system. I don’t know how that money is to be distributed between acute care hospitals, physicians, long-term care facilities and other medical providers. But for purposes of illustration and subject to verification, let us assume that one-third goes to acute care hospitals, thus reducing charity care and bad-debt write-offs by $1 billion. Virginia hospitals still will be providing a lot of free health care, but they could see a roughly 60% increase in profits.

So, yeah, I expect Medicaid expansion will be “credit positive” for the industry.

Now, let’s conduct another mental exercise. Let’s ask what the impact will be on Virginia’s most profitable hospitals. I totaled the charity care and bad debts for each institution and assumed that Medicaid would reduce them by one-third. Please note, these estimates represent no more than a Scientific Wild Ass Guess useful only for ascertaining order-of-magnitude effects. Here’s what the numbers look like:

Of the hospitals reporting the highest profits in FY 2016, all but Henrico Doctors Hospital were “non profit.”

As Bacon’s Rebellion readers know, I think profits are a beautiful thing. But some profits — those that arise from innovation, productivity, efficiency, and the like — are more socially beneficial than others. Profits that arise from creating monopolies and cartels, restricting competition through the exercise of political influence on government rules and regulations, and relentlessly jacking up charges to paying patients is not socially beneficial. The problem is compounded when the entities engaging in this behavior are nonprofit. Whatever else you say about the business practices of Andrew Carnegie, Henry Clay Frick and John D. Rockefeller, at least they paid taxes!

Bacon’s Rebellion will be watching hospital profitability closely. The big question: What will the highly profitable non-profits do with the gusher of money? Will they hold down charges to patients… or will they continue plowing the money into institutional expansion?

Update: Readers have pointed out that hospitals’ reports of charity care are wildly inflated because they are pegged to absurdly high nominal prices for care that almost no one pays. One implication is that hospitals are far less generous than they purport to be. Another is that my methodology for calculating the financial impact of Medicaid reform on profits is inflated by a similar amount.

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Posted in Health Care, Not-for-profits

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Health Care Subsidies, Regulation and Market Failure

Posted on August 1, 2018 by | 14 comments

The United States devotes nearly 20% of its economy to health care but is widely regarded as getting less for its money than most other countries with advanced economies. What is driving costs so high? The Wall Street Journal suggests some answers, which totally vindicate Bacon’s Rebellion’s analysis in every regard. The Journal’s bottom line:

Americans aren’t buying more health care overall than other countries. But what they’re buying is increasingly expensive. Among the reasons is the troublesome fact that few people in health care, from consumers to doctors to hospitals to insurers, know the trust cost of what they are buying and selling. In some cases, costs are largely secret. Providers, manufacturers and middlemen operate in an opaque market that can mask their role and their cut of the revenue. Mergers give some players more heft to enlarge their piece of the pie.

Percentage of consumer expenditure devoted to health care. Source: Wall Street Journal

This chart shows how health care is hogging an ever-increasing share of consumer expenditures on health care. Notice where most of the growth is coming from — health insurance. Consumers are spending less out of their own pockets and more, indirectly, through Medicare, Medicaid, and private insurance. Explains the Journal:

Contributions to employer-sponsored health coverage aren’t taxed, which makes it less expensive for companies to pay workers with health benefits than wages. Generous benefits lead to higher spending, according to many economists, because employees can consume as much health care as they want without having to pay significantly more out of their own pockets.

The tax benefit is the country’s biggest single income-tax break, amounting to an $854 billion subsidy.

Source: WSJ

Meanwhile, thanks largely to state and local regulatory policies, the hospital industry is consolidating and health care systems are exercising greater power in the medical marketplace than ever before. Inflation in hospital prices, along with inflation in pharmaceutical prices, are driving health care cost increases far more than charges for physician and clinical services, as can be seen above.

Source: WSJ

Research shows that competition does matter. In markets with less competition, consumers pay more for common procedures, as seen in the chart to the left. The revenue of health care companies represented nearly 16% of the total revenues of firms in the S&P 500 last year, up from about 4% in 1984, states the Journal. (Presumably, that does not include revenues of nonprofit healthcare companies. They, too have, soared.)

Here in Virginia, profitability of healthcare companies is extremely healthy. While a handful of rural hospitals are losing money, the big hospital chains and healthcare systems are immensely profitable — regardless of whether they are for-profit or nonprofit.

How have hospitals done it? In part  by working the political system to rig the rules in their favor — whether through Certificate of Public Need (COPN) regulations at the state level or inserting rules in the Affordable Care Act that effectively banned physicians from competing with hospitals by restricting outpatient clinics. Health care companies have more than doubled their lobbying spending (adjusted for inflation) since 1998. They also have increased their share of total lobbying expenditures by all industries.

Source: WSJ

These numbers are all national in scope, and they undoubtedly reflect significant variation by state. But they are entirely consistent with what I have seen and blogged about in Virginia. Where the data allows and I have time, I will try to document trends for the Old Dominion.

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More Evidence that Virginia’s Healthcare System Is Broken

Posted on July 17, 2018 by | 5 comments

Surprise bills for medical care that Virginians expected insurance to cover are on the rise, a General Assembly healthcare panel was told yesterday. (The Daily News has the story here.)

Typically, the unexpected charges occur when patients are billed from outside their insurance company’s network. A person might go to a doctor who orders a test from a lab that has no agreement with the insurance company. Or a someone might go to an emergency room and get a bill from an anesthesiologist or pathologist outside the network. Or an emergency-room patient might wind up spending the night at an out-of-network hospital.

Another problem is the absurdly inflated prices attached to services for which insurance companies negotiate steep discounts. If a patient goes out-of-network, they get stuck with the inflated price. In one example cited in the hearing a Blue Cross Blue Shield member on the Virginia Peninsula was charged $3,687 for urinalysis tests over three months that allegedly could have done at Rite Aid for $50.

“There’s no excuse for these kinds of charges for something somebody else is making money with at $50. Basically, it’s fraud,” snapped state Sen. Frank Wagner, R-Virginia Beach.

Bacon’s bottom line: Well, labeling the charges “fraud” is unhelpful hyperbole — although I can understand the sentiment. Providers aren’t acting out of some nefarious desire to stick it to their patients. They are trapped in a fundamentally flawed system with two core components.

First, providers charge prices for services that bear no relationship to the cost of providing the services; they do so as part of their annual dance with insurers, which negotiate discounts as part of their value proposition to members. Over the years, the prices have become untethered from reality. Anyone stuck paying the list prices is totally and utterly hosed.

Second, insurers have found that they can negotiate steeper discounts by creating exclusive provider networks. Hospitals, doctors and others are willing to offer steeper discounts for policies that steer patients to them. In a marketplace with multiple insurers and multiple providers, the relationships can get very complex and confusing. Checking to see who is in-network and out-of-network can be problematic if the need for treatment is urgent, as it typically is in an emergency room.

The danger I see is that the General Assembly might create some arbitrary consumer protection that generates unintended consequences in which the new set of problems is even worse than the original set. Before taking hasty, ill-considered action, legislators need to attack the root of the problem — the insane disparity between list prices and negotiated prices. That’s where the system has broken down, and that’s what needs to be fixed.

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Posted in Consumer protection, Health Care

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Dealing with Sickos in a Free Society

Posted on June 30, 2018 by | 11 comments

Jarrod Ramos

The massacre of five journalists in Annapolis, Md., two days ago was a tragedy — one that I, who worked many years in newsrooms like that of the Capital Gazette, can relate to personally. Sadly, it did not take long for the finger pointing to begin. A predictable first target was President Donald Trump, who on multiple occasions has described journalists as “enemies of the people.” It took mere minutes for a Reuters editor to tweet, “blood is on your hands, Mr. President.”

Even the most outspoken critics of the president have backed away from such accusations now that it’s clear that the alleged killer was not a right-wing nut job but an individual, clearly mentally ill, who bore idiosyncratic grievances against the newspaper. But that hasn’t stopped some commentators from still wanting to make Trump the issue.

In a column today Washington Post columnist Margaret Sullivan does state clearly that there is no “causal” connection between Trump’s comments and the actions of the unhinged gunman. However, she writes that Trump, like the accused Jarrod Ramos, displays “a dangerous failure to understand the role of the media in our society.” She draws linkages between the Gazette shooting and a media “under siege” from shrinking newspaper resources, mounting legal threats, Trump’s verbal abuse, and a Trumpian attitude that has “infected the entire culture.”

News flash to Sullivan: Your pretzel logic is precisely why millions of Americans have lost all faith in mainstream media outlets like the Washington Post! You are a caricature of what Nassim Nicholas Taleb calls an IYI — Intellectual Yet Idiot.

If the Annapolis shooting is symptomatic of anything, it is the fact that the United States is suffering from an epidemic of mental illness, that thousands of angry and alienated middle-aged white males like Ramos are ticking time bombs wandering around loose, and that society has failed to contrive a way to predict and curtail their explosive behavior. That truth, obvious to anyone with common sense, is the rogue elephant in the room, knocking over the furniture and punching holes in the wall. Yet Sullivan wants to talk about Trump!

Frankly, I’m surprised that more incidents like this haven’t happened in American newsrooms. Why? First, because newspapers, especially those covering local news, write about the dark underbelly of human behavior. Reporters cross paths with nut jobs more frequently than other Americans do. Also, as semi-public figures who write about the whackos, they draw the ire of the whackos.

Second, mental illness is rampant — and it’s getting worse. Eighteen percent of all Americans have a mental health condition. Nearly 10 million experience suicidal ideation. Most Americans work their way through those impulses, but many do not. Some, turning their pain inward, kill themselves. Others, turning their pain outward, kill others. At any given time, tens of thousands of Americans are nursing bitter personal grievances and entertaining fantasies of violent vengeance. If Sullivan wants to draw linkages, perhaps she should explore the ties between the epidemics of suicide, school shootings, workplace violence, and suicide by cop by alienated, loner white males. 

The 38-year-old Ramos, we have learned, has long displayed unstable behavior. He lived alone, rarely socializing with anyone. He spent years harassing a female high school acquaintance, then, when the Gazette ran an article about his case, he transferred his unrelenting fixation and animosity to the newspaper. Brennan McCarthy, the woman’s attorney, has said that no one had ever frightened him as much as Ramos did. He called Ramos a “classic loner” and “as angry and obsessive an individual as you will ever meet.”

Ramos broadcast his instability for the whole world to see. People feared him. But no one did anything. Why? Apparently, that question has yet to occur to Margaret Sullivan.

Perhaps no one acted because in the United States, we don’t arrest people, or even deprive them of their liberty, until they have demonstrated that they are an imminent threat to themselves or others — and even then it’s darned hard to lock them up.

As we plunge deeper into the thicket of causality, we could ask why such spasms of violence seem to be increasing in frequency. Why is mental illness getting worse, and why is violence by pathetic loners becoming endemic? Has our healthcare system failed to keep pace with the demand for mental-health services? Has the policy of closing institutions and providing community treatment contributed in some way? Have laws and court rulings made it more difficult for people to seek legal and/or law-enforcement protection against creepy behavior by obsessive individuals? 

One can legitimately say a lot of negative things about Donald Trump. I frequently do on this blog. But link him, however indirectly, to the Gazette shooting? One might call such thinking delusional.

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Posted in Health Care, Media

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Health Care Only Matters If You Can Get It

Posted on June 25, 2018 by | 7 comments

How long will those smiles last if there is no vaccine today? Source: GSK Website

A family member was on hold with a neighborhood chain pharmacy during a recent call.  The purpose of the call?  To schedule her second shot in the new shingles vaccination regimen.  Even though she got shot number one there, the response was not one single outlet of the giant chain in the Richmond region had the vaccine, and none would give her an idea when to call back.

While she was on hold, the voice-over ad was touting the new shingles vaccine! “That ad decision was made by corporate” the frustrated pharmacist said when challenged on that point.  Well, I suspect corporate was compensated well for that decision.

It was easy to find this Washington Post piece about the shortage and this information on the Centers for Disease Control website.  CDC expects the shortage to last through 2018 and that chain drug store, with the three-letter name, told my family member they are so swamped with demand that most stores simply will not do the shots even if supply comes in.

Shingles is no fun, I’m told, but it won’t kill you.  The CDC reports no similar shortage of vaccines for the diseases that can kill you, such as meningitis or pneumonia.

This tells me demand is purely a function of a massive advertising campaign by the manufacturer and is also driven by the co-pay-less availability of this “ounce of prevention” under many health plans.  The role of advertising and other marketing practices in the misallocation of health resources in this country is substantially underestimated.  We do pay for those ads, one way or another.

I had to think back to earlier statements on Bacon’s Rebellion that just because another 300,000 or more Virginians may soon have a third-party payment method for health care that is no guarantee they will find it.  And if massive resources are going to be deployed to create such overwhelming demand, should the shingles shot be the target?

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Too Early to Predict Impact of Medicaid Expansion on Carilion

Posted on June 18, 2018 by | 15 comments

Carilion Roanoke Memorial Hospital, flagship of the Carilion fleet.

Information continues to dribble out about the impact of Medicaid expansion on Virginia hospitals, although there still seems to be no consensus on whether or not the costs of a hospital “assessment” will be passed on to privately insured patients. The uncertainty reinforces the impression that Governor Ralph Northam and GOP lawmakers bought a proverbial “pig in the poke” when they agreed to enlarge Virginia’s largest entitlement program.

The latest evidence on the hidden cost of Medicaid expansion comes from Don Halliwell, chief financial officer of Carilion Clinic, the health system serving much of western Virginia. Halliwell tells the Roanoke Times that the health system will pay about $27.5 million a year once expansion is fully underway, but he cannot tell how much the system will reap in return.

“It is a victory for our communities and a victory for our patients, but boy, it’s complicated,” Halliwill said. “We know the direction and what has been stated as the intentions. But how it will play out we just don’t know.”

Left unaddressed in the article is the question of how much Virginia will need to spend to raise Medicaid reimbursements to physicians — an issue that was deferred by this year’s legislation. Reimbursement rates of about 71% of cost are so low that many primary care doctors refuse to accept money-losing Medicaid patients. There is a growing awareness that expanding Medicaid coverage to Virginia’s near-poor population is meaningless if patients can’t find doctors to treat them.

Luanne Rife does not address that issue, but her article in the Times otherwise does the best job I’ve seen yet of exploring the financial implications of Medicaid expansion at the provider level.

If everyone who will soon qualify for Medicaid signs up, Carilion will gain at least 17,000 paying patients in its core service area and a share of another 17,000 people living in outlying areas.

Most of these patients are now what Carilion calls “self pay.” Last year, this group represented about 6 percent, or $255 million, of Carilion’s charges for inpatient and outpatient services. Much of it is written off.

In the first year of Medicaid expansion, the hospital assessment on all acute care hospitals (with the exceptions of the University of Virginia, Virginia Commonwealth University and the Childrens Hospital of the King’s Daughters) will pay an assessment of 1.1% on net patient revenue, or an estimated $190 million statewide. In the second fiscal year the tax will increase to 2.3%. In exchange, states the Times article, the state will boost reimbursements for Medicaid services from 70% of hospital costs to 88%.

With higher reimbursements and thousands more paying patients, budget makers figured that after assessments, hospitals across the state would net $263 million the first year and $617 million in the second full year of expansion.

Hospitals with few Medicaid patients might pay more than they gain, and there is speculation they will pass along their losses to commercial insurance payers.

What does that mean for Carilion? Halliwell isn’t sure. “I can only speak for myself, but I don’t see a way where we would be in a position where our assessment would be greater than the benefit,” he said. “If your assessment was greater than the benefit then you would have excess costs. A system would have to figure out a way to pay for it. I wouldn’t speak for them, but it could be passed on.”

Bacon’s bottom line: The politicians don’t know what the impact will be. The hospitals don’t know. Nobody knows. All anyone can say is that in the aggregate, more Medicaid money will flow into hospitals as will flow out. While hospital lobbyists engineered what looks like a political deal for their industry, the hospitals themselves have not figured out how the money flows will work internally. One thing you can bet on, more money will mean bigger hospital profits — including those of the so-called nonprofit hospitals.

Here are some benchmark figures for the Carilion Medical Center, the flagship operations in Roanoke, to monitor in the years ahead as Medicaid expansion unfolds (2016 figures):

Charity care — $142 million
Bad debt — $71 million
Net patient revenue — $1,174 million
Operating income –$66 million
“Surplus” (profit) including non-operating gains — $100 million

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Being Dealt A Losing Hand That Lingers

Posted on June 14, 2018 by | 14 comments

There are times in life when four aces is a tough hand to hold.

Common themes on this public policy forum include poverty and its causes and cures, school failure and related discipline matters, health problems and the difficulty understanding why these conditions remain so widespread in this great nation and commonwealth.  I invite you to temporarily suspend your preconceived notions and examine some hard data that upset some of mine.

My quick summary is not doing this work justice but this is a blog, not the New Yorker.

More than twenty years ago two researchers on opposite sides of the country were feeling their way toward explaining strong correlations they observed between childhood experiences and later physical diseases.  One noted that people who dropped out of obesity treatment were often sex abuse victims.  A collaborative study was funded by the Centers for Disease Control and Kaiser Permanente.  About 17,000 people were asked to fill out a simple 10-question survey on various adverse childhood experiences (ACEs) and then the results were correlated with their health records.

Here, take the test yourself.

The results were astounding.  Adults who had high ACE scores also were substantially more likely to have – decades later — a number of health problems up to and including early death. People with a score of six or more were potentially looking at lifespans of 20 fewer years.  From the summary I linked:  “Compared to an ACE score of zero, having four adverse childhood experiences was associated with a seven-fold (700%) increase in alcoholism, a doubling of risk of being diagnosed with cancer, and a four-fold increase in emphysema; an ACE score above six was associated with a 30-fold (3000%) increase in attempted suicide.”

It was widely known that children who were physically or sexually abused were more likely to become offenders themselves, and the concept of psychosomatic illness is ancient.  We’ve long talked about the cycle of poverty.  But here was hard proof in a simple and easy to replicate study.  It then led to brain studies that discovered that trauma and the resulting floods of cortisol and adrenaline actually change physical brain structures.  The how is becoming clearer.

This initial group was not a low-income population.  Heart disease, depression, family violence, drugs and learning problems are not limited to poor neighborhoods.  But the work has sparked a slowly spreading revolution in education and social services.

Consider the implications of simply changing the question “What is wrong with this child?” to “What has happened to this child?”  When you make that mental shift, does it change the way you think about the argument over long suspensions for primary school students with control issues?  Do you really think sitting out of school for a long period (unsupervised) is going to change anything?  Do you worry a little bit more about the impact on a child of a being evicted a series of times?  Are you a bit more interested in providing Medicaid to the whole family instead of just the children?

Source: CDC

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Posted in Crime and corrections, Health Care, Social services

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